• AUD/USD fall from above 0.78 since mid-April has its roots in an exodus from Emerging Markets, AUD demonstrating its credentials as the preferred China/broader EM financial and economic risk proxy.
• Falls in commodity prices in June (e.g. industrial metals circa -8%) also now weighing, at the same time as (negative) AU-US interest rates differentials continue to widen.
• AUD/USD is now expected to be largely contained within a 0.70-0.75 trading range.
• Importers: May want to view a move back to or above 0.75 as advantageous for shorter and longer dated hedging.
• Exporters: Near term may want to consider moves below 0.73 as attractive for repatriation/additional hedging.

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